Homeownership Takes Biggest Drop Since Great Depression
Homeownership
The U.S. Census Bureau just released a report that showed the homeownership rate in the U.S. fell to 65.1 percent last year. This is the largest drop since the Great Depression! Now, many believe the U.S. may never return to its mid-decade housing boom peak in which nearly 70 percent of occupied households were owned by their residents.
Also, some are speculating that there is a shift going on where the American dream of homeownership is fading in favor of the idea of the flexibility that renting provides.
Here in San Diego, I would venture to guess that the vast majority of home purchasers from 2005 through 2010 would have been far better off, at least financially if instead of purchasing a home, they had rented one here in San Diego during this time. Read more 
Eliminating the Home Mortgage Deduction
San Diego home for sale
Since being put in office, the Obama administration has been putting out feelers about possibly reducing and/or limiting the home mortgage interest deduction. Now after unbridled deficit spending, the administration is once again looking at the home mortgage interest deduction.
Rather than directly taking blame for reducing or eliminating this wildly popular subsidy, Obama appointed a panel to look into ways of cutting the deficit. To say this panel was bipartisan would be a stretch, as few of its members were conservative thinkers. What better way to eliminate a popular deduction than by shifting the blame to some bipartisan commission’s recommendation?
In a recent small poll, five out of the eight professors/economists thought that reducing or eliminating the home mortgage deduction would be a good way to cut the deficit. Read more
Homeownership More Cost-Effective Than Renting
San Diego homeownership
While conventional wisdom holds that single adults prefer to live in urban areas, a national real estate company survey finds that a majority of single homeowners (52 percent) choose to live in the suburbs. The study finds that a majority of single homeowners (53) percent) said they bought a home because it was more cost-effective than renting, while 35 percent said they wanted more independence. What’s more, singles prove to be practical: More than two-thirds of single homeowners surveyed (68 percent) purchased a home that was below their price range rather than choosing to buy the most expensive home they could afford.
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American Homeownership
American homeownership is at 67% and falling.
Government started 20 year mortgage during the depression to help homeowners.
In 1948, the term was extended to 30 years. The 30 yr fixed mortgage meant low payments and affordability for most working Americans. The introduction of the 30 yr mortgage lead to a home buying boom because after the depression everyone was eager to finally be a homeowner and it was now more affordable than ever. Hence, the suburbs were born around this time.
Today, economists believe the 30 yr mortgage is outdated.
U.S. leads world in using the 30 yr mortgage, but not in home ownership:
U.S. vs. the world
| % fixed | Homeownership % | |
| Spain | <1% | 85% |
| U.S. | 90% | 67% |
| Japan | 21% | 60% |
| Canada | 10% | 69% |
In the U.S., people spend more and don’t necessarily get a good bang for their buck.
Also, America is nearly alone in not charging a fee for not paying mortgages early
America is also liberal in making money put towards mortgage interest, tax deductible.
Relative to the rest of the world, Americans have a sweet deal when it comes to buying their homes.
The government is the one who picks up the tab and accommodates this homebuying structure.
If we take the government out of housing, buyers will face shorter loans, higher interest rates, higher payments, and less affordability.
the 30 year mortgage = affordability. Without it, will Americans be able to buy homes?
The big question: Can we have the 30 yr mortgage without the government guarantee behind it?
The Canadian structure is very different, should we model our system after them?
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Home Ownership Falls
home ownership
Data released by the Census Bureau yesterday. shows that the U.S. homeownership rate dropped to 66.9 percent during the second quarter of this year, hitting its lowest mark in more than 10 years.
The Census Bureau reports that approximately 85.6 percent of the housing units in the United States last quarter were occupied. Owner-occupied homes made up 57.3 percent of total housing units, while renter-occupied units made up 28.3 percent of the inventory.
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Survey Looks at Sentiment Toward Housing
Fannie Mae
A just released Fannie Mae National Housing Survey, conducted between December 2009 and January 2010, polled homeowners and renters to assess their confidence in home ownership as an investment, the current state of their household finances, views on the U.S. housing finance system and overall confidence in the economy.